Bitcoin (BTC)’s recent pricing measures suggest that institutional investors have not yet made a strong comeback, leaving the market in the consolidation stage.
Bitcoin dropped sharply from an all-time high of $109,590 on January 20th to a low of $77,041 last week, according to a Bitfinex report. This 29.7% drop marks the second deepest correction in the current bull market.
Historically, bull markets tend to experience a correction of about 30% before resuming the rise, according to Bitfinex. However, this cycle is characterized by shallower pullbacks, primarily due to institutional adoption and demand from spot Bitcoin exchange trade funds (ETFs). Nevertheless, short-term holders are currently facing net unrealized losses, increasing the pressure on the sell-side. Investors who have purchased Bitcoin in the last 7-30 days are particularly vulnerable to surrender, further exacerbating the weakness of the market, analysts say.
The main concern highlighted in the report is the slowdown in fresh capital inflows. As new money enters the market, cost-based trends change, this is usually a sign of weakening demand. This is becoming more obvious as Bitcoin struggles to maintain its main support levels. Without significantly new purchasing activities, BTC could remain long-term in the integration or even diminish as weaker holders withdraw their position.
Market analysts have suggested that long-term holder revert and institutional demand will be important when deciding on the next move for Bitcoin. When deep investors begin to absorb supply at these low levels, they can indicate the onset of accumulation stages, stabilizing prices and turning market sentiments into bullish territory.
*This is not investment advice.
